Genuine application

Labour & European Law ReviewWeekly Issue 26412 April 2012

When making someone redundant, employers have to act reasonably when considering the pool for selection. In Capita Hartshead Ltd v Byard, the Employment Appeal Tribunal (EAT) said that although the question of how the pool should be defined was “primarily” a matter for employers, it was not impossible for employees to successfully challenge their decision.

Basic facts

Ms Byard, an actuary, was told that she was going to be made redundant because of a reduction in her work - a few of the pension schemes in her portfolio had closed and some clients had gone elsewhere.

Although there were three other actuaries, the company put her into a selection pool of one. It said that, as scheme appointments were personal, there was a risk it would lose more clients if it swapped her with actuaries handling other schemes.

In addition, the company said that as the bulk of the work that had been lost was hers, team morale would be affected if it had included the other actuaries in the pool, as their portfolios had not diminished to any great extent.

She claimed unfair dismissal, arguing that all four actuaries should have been included in the pool.

Tribunal decision

The Tribunal ruled that it was unfair to limit the size of the pool to one as there were other actuaries who could have been included. Ms Byard had effectively been selected because her client list had diminished although the company had been careful not to associate this with her performance.

Noting that the company had changed scheme actuaries in the past, it held that the risk of clients becoming disenchanted if they had swapped Ms Byard with someone else was “slight”.

It said that the company had succumbed to the temptation of “presenting the alternative choice of a pool of more than one as entailing extra and unnecessary upheaval”, which had also undermined the whole point of the consultation period.

The company appealed, arguing that the question of how the pool should be defined was primarily a matter for the employer.

EAT decision

But the EAT disagreed, holding instead that the Tribunal had followed the correct approach:

It had asked whether dismissing Ms Byard lay within the range of conduct which a reasonable employer could have adopted.

It had applied the “reasonable response” test to the selection of the pool from which the redundancies were to be made.

It had acknowledged that the question of how the pool should be determined was primarily a matter for the employer and that it was difficult for employees to challenge that decision if the employer had “genuinely applied” their mind to the problem.

Given the Tribunal’s findings, it was entitled to conclude that the company had not genuinely applied their mind to the issue of who should be in the pool for redundancy and had acted unfairly in not including the other actuaries.

It made clear that, even though “the question of how the pool should be defined is primarily a matter for the employer to determine”, Tribunals can still find that the employer got it wrong if they failed to genuinely apply their mind to the problem of who to select for the pool, as in this case.

The EAT noted that even if an employer genuinely applies their mind to the selection of the pool the decision will be "difficult" but not "impossible" for an employee to challenge.